filing for social security at 70, Medicare Part B impact

Terry Says

You should apply for Social Security the month before you turn 70– and specifically state that you don’t want to collect it a day before 70! (They’ve been telling people they will get a bonus if they file at 69-1/2 — which permanently lowers their benefit, so don’t fall for that!)

As my mom used to say, don’t complain about paying taxes; it means you made money!

It is what it is. You can wait until 73 to take RMDs from your retirement account. And you can keep working, paying taxes (including SS!). Congratulations! And do check out the impact on your Medicare Part B premium — but don’t stop working (and saving) if you can.
Here’s the Medicare Part B impact in 2023:

In this article
How income affects Medicare premiums
For 2023, the IRMAA surcharge threshold increased to $97,000
Does “Medicare income limits” mean the same thing as IRMAA?
IRMAA is determined by income from your income tax returns two years prior
2023 Part B IRMAA premiums and Part D IRMAA surcharges
Appealing your IRMAA determination
How the SECURE Act of 2019 could affect your premiums

Does income affect Medicare premiums?
Yes, your income can affect your premiums for Medicare Part B and Part D. People with high incomes (in 2023, that’s defined as over $97,000 for a single individual) pay higher premiums for Medicare Part B and Medicare Part D. Most people do not pay any premium for Medicare Part A, but even for those who do, there is no income-related surcharge, so Part A premiums are not affected by income.

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What is IRMAA?
Medicare beneficiaries who earn over $97,000 a year – and who are enrolled in Medicare Part B and/or Medicare Part D – pay the income-related monthly adjusted amount (IRMAA) – a surcharge added to the Part B and Part D premiums. The threshold for IRMAA surcharges was quite a bit lower in 2022 (it started at $91,000), but it grew for 2023, due to inflation.

Since 2007, high-income Medicare enrollees have been required to pay the IRMAA surcharge for Part B coverage. An IRMAA surcharge for Part D premiums took effect in 2011.

For Medicare beneficiaries who receive Social Security retirement benefits, the premium for Part B is deducted from their Social Security check. This is true regardless of whether the person is subject to the IRMAA surcharge or not. But the “hold harmless” provision that prevents Social Security checks from decreasing from one year to the next does not apply to people who pay the IRMAA surcharge.

(The “hold harmless” provision has not been applicable in recent years, due to fairly large cost-of-living adjustments (COLA) for Social Security benefits. The 2023 COLA was historically large, and Part B premiums declined for 2023, including the Part B premiums that are paid by people subject to the IRMAA surcharge. So net Social Security checks are generally larger across the board for 2023 than they were in 2022.)

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Does ‘Medicare income limits’ mean the same thing as IRMAA?
When people talk about “income limits”with regard to Medicare, they could be referring to the threshold where IRMAA surcharges start to apply for those on the higher end of the income spectrum. (Above a certain income limit, you’ll be subject to IRMAA, but below it, you won’t.)

But they could also be referring to the income thresholds that apply to Medicare Savings Programs and dual eligibility for Medicare and full Medicaid, for those on the lower end of the income spectrum. (Note that on the lower end, eligibility rules also include asset limits, in addition to the income limits.)

So you’d need to know the context in order to determine which program is being discussed: Is it an upper income limit, below which a person has access to certain financial assistance with their coverage? Or are they referring to the highest income a person can have and not be subject to paying additional premiums for their Medicare coverage?

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How is my income used in my IRMAA determination?
IRMAA is determined by income from your income tax returns two years prior. This means that for your 2023 Medicare premiums, your 2021 income tax return was used. This amount is recalculated annually. The IRMAA surcharge is added to your 2023 premiums if your 2021 income was over $97,000 (or $194,000 if you’re married). You will receive notice from the Social Security Administration to inform you if you are being assessed IRMAA. But as discussed below, there’s an appeals process if your financial situation has changed.

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How is income calculated for Medicare’s IRMAA determinations?
The income used to determine IRMAA is a form of Modified Adjusted Gross Income (MAGI), but it’s specific to Medicare. The Modified Adjusted Gross Income is different from your Adjusted Gross Income, because some people have additional income sources that have to be added to their AGI in order to determine their IRMAA-specific MAGI.

It’s important to understand that MAGI for calculating IRMAA isn’t the same as the normal MAGI that you might be accustomed to for non-healthcare purposes, nor is it exactly the same as MAGI for calculating premium tax credits and Medicaid/CHIP eligibility under the Affordable Care Act. Table 1 in this Congressional Research Service brief is useful in seeing how MAGI is determined for IRMAA calculations.

How have Medicare’s income-related surcharges changed over time?
There have been a few recent changes that affect high-income Medicare beneficiaries:

In 2019, a new income bracket was added at the high end of the scale, for people earning $500,000 or more ($750,000 for a married couple). Prior to 2019, the highest income bracket was $160,000+ ($320,000+ for a married couple). But in 2019, the new income bracket meant that a beneficiary earning $500,000+ would be paying a larger premium than someone earning $160,000.
2020 was the first year that the income thresholds for IRMAA surcharges were adjusted for inflation. Prior to that, it started at $85,000 and that number had been unchanged since the program began. But starting in 2020, the thresholds were adjusted for inflation, with the low-end threshold increasing to $87,000 for a single person.
For 2021, the IRMAA thresholds were indexed again, with the low-end threshold increasing to $88,000 for a single person.
For 2022, the IRMAA thresholds started at $91,000 for a single person and $182,000 for a married couple.
For 2023, the IRMAA thresholds increased significantly, to $97,000 for a single person and $194,000 for a married couple.
Going forward, the Modified Adjusted Income requirements will continue to be adjusted by inflation (CPI).

How much are Part B IRMAA premiums in 2023?
As noted above, the IRMAA brackets increased again for 2023, although Part B premiums decreased.

Here are the Part B IRMAA premiums for 2023. (For each income range, based on 2021 tax returns, the applicable premium is shown on the right. For incomes that are subject to IRMAA, the premium shown includes the IRMAA surcharge.):

Part B IRMAA premiums (2023)
Individual Joint Monthly Premium
$97,000 or less $194,000 or less $164.90 (no IRMAA)
> $97,000 – $123,000 > $194,000 – $246,000 $230.80
> $123,000 – $153,000 > $246,000 -$306,000 $329.70
> $153,000 – $183,000 > $306,000 – $366,000 $428.60
> $183,000 – $500,000 > $366,000 – $750,000 $527.50
Greater than $500,000 Greater than $750,000 $560.50